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U.S. retail sales fall in September, core sales slows down further
U.S. retail sales dropped in the month of September, as compared with consensus expectations of a rise. On a sequential basis, retail sales fell 0.3 percent, as compared with expectations of a rise of 0.3 percent. However, the sales data for prior month was upwardly revised to 0.6 percent from 0.4 percent.
The fall was broad based, with sales in most categories deteriorating on the month. Among the more volatile groups, food services & drinking places were the only category to see a rise in September, with sales falling markedly at autos & parts dealers, gasoline stations and building material & garden equipment stores.
The “control group” sales, which excludes the aforementioned volatile components, came in flat, as compared with expectations of gain of 0.3 percent. The flat print in the control group masked a mixed performance among the underlying subcategories. Sales rose in clothing, health stores, furniture and miscellaneous stores; however dropped in the remaining categories.
On a quarter-on-quarter basis, in spite of a mild slowdown, sales continued to sport solid gains. Retail sales and food services rose 6 percent in the third quarter from second quarter’s 7.7 percent, whereas control group sales came in at 6.8 percent and 7.9 percent, respectively.
The subdued performance, both at stores and online, is disappointing, but has to be put in the context of a solid six-month run, noted TD Economics in a research report.
“The latest data leaves our tracking for third-quarter consumption at just shy of 3 percent annualized – a slowdown from the second quarter, but still a solid print, with consumption among the brightest spots in the economy. The September retail sales print provides a soft handoff to fourth quarter consumption. Lower interest rates and a still-solid employment backdrop should continue to offer support, but with many important trade decisions to be made in the homestretch of the year (i.e. with respect to China and the EU), the confidence channel remains a wild card”, added TD Economics.